In joining the club, Colombia will become the 37th member nation and just the third from Latin America, along with Mexico and Chile.

“We are now part of the big league!” – Colombian President Juan Manuel Santos

The news was celebrated on Twitter this morning by Colombian President Juan Manuel Santos, who had set joining the OECD and, more generally, making fiscal reforms as key goals of his presidency.

“Seven years of intense work to receive this excellent news: the council of the OECD approved Colombia’s entry,” said Santos. “We are now part of the big league!”

Santos, who is reportedly set to sign the official membership agreement in Paris next week, added that this is “a very important step” that will help in efforts to modernize the country. “We compare ourselves with the best to be the best,” said Santos. “We have great opportunities to advance in health, education, the fight against corruption, and the protection of the environment.”

The review process to become a member is rigorous. Colombia’s path to “accession,” the term favored by the OECD, began in 2013 and lasted longer than is typical.

The years of OECD committee meetings and recommendations have led to various policy changes in Colombia that address both larger, structural issues, such as the integrity of the nation’s justice system, and business-level concerns, including the respect for intellectual property rights as well as market access for foreign pharmaceutical and manufacturing companies.

“As part of its accession process,” said the OECD in a statement, “Colombia has been subject to in-depth reviews by 23 OECD Committees and has introduced major reforms to align its legislation, policies, and practices to OECD standards, including on labor issues, the reform of its justice system, corporate governance of state-owned enterprises, anti-bribery, trade as well as new national policies on industrial chemicals policy and waste management.”

Benefits of Joining the OECD

According to many international experts, the key benefit of OECD membership for countries is the formal recognition. Being in the club offers a level of confidence among investors and the global community at large that the nation has established a modern, stable economy that generally adheres to international standards in terms of free market policies, tax schemes, legal protections, and dispute resolution.

“States seek status by associating with a group of like-minded and powerful states,” wrote Christina L. Davis, professor of politics and international affairs at Princeton University’s Woodrow Wilson School of Public and International Affairs, in a 2016 paper on the topic. “Joining the OECD represents a choice of social category within the international system that brings with it both norms of behavior and beneﬁts for reputation.”

In addition to reputation benefits and having a seat at the table in international events, membership provides other soft benefits. Being in the club ensures that the nation’s economic trajectory — as well as many social, environmental, and other metrics — are more routinely and rigorously tracked by a wide ranges of reports and studies conducted by both the OECD itself and other global institutions.

Such data can be valuable for not just investors and those creating government policy but non-governmental, educational, and social organizations that can use this information to better quantify challenges, progress, and other trends within a nation’s economy.

Despite it often being called a club for the world’s wealthy nations, simply having a large economy is no guarantee of being invited to join the OECD. Many non-democratic countries, such as China, have never been invited, while Russia, which had begun negotiations to join earlier this decade, became persona non grata after its 2014 invasion of Crimea.

Argentina is another nation that has expressed interest in joining. But it has so far been rebuked, despite having the third-largest economy in Latin America, reportedly due to its economic volatility and unpredictable policy decisions over the past two decades.

Opposition to Colombia Joining the OECD

Various U.S. stakeholders had sought to prevent Colombia’s membership in recent months until it instituted further reforms on matters including the respect for intellectual property rights as well as policies that ensure competitive fairness for foreign drug and truck manufacturers.

U.S. Trade Representative Robert Lighthizer stressed that Colombia must make amendments to its copyright law and that it still did “not meet the high standards of the OECD.”

U.S. Trade Representative Robert Lighthizer, in a February letter to Colombian Trade Minister Maria Lorena Gutiérrez, stressed that Colombia must make amendments to its copyright law and that it still did “not meet the high standards of the OECD” in this area.

He noted other ongoing concerns as well, including that “U.S. heavy truck manufacturers continue to have serious concerns with the openness of Colombia’s market, as well as the predictability and transparency of Colombia’s regulatory system.”

The OECD has previously addressed these and other issues. In a recent report, the organization noted that “pharmaceutical companies continue to face significant challenges in getting new products approved in Colombia, despite Colombian regulations that call for an expedited pharmacological review of products.”

On Colombia’s mandatory truck replacement program, the OECD said that this “is considered to be a serious barrier to trade and a source of corruption in Colombia.” While some changes have been made to eliminate this “one-for-one scrapping program,” the OECD still stated that “serious concerns remain and market access remains restricted.”

Domestically, various labor unions, including the Confederación de Trabajores de Colombia (CTC) and the Central Unitaria de Trabajadores (CUT), had also petitioned the OECD to not let the country into the club until more protections were enacted to safeguard union workers from violence, improve standards for collective bargaining, and address other labor issues.

The Paris-based Trade Union Advisory Committee (TUAC) to the OECD, which meets with unions across the world, outlined that these Colombian groups have called for action on the following issues: “continuing violence against trade unions and social activists; refusal and withdrawal of protection; persistently high rates of impunity for crimes against trade unionists; the lack of progress on tackling informality and abusive sub-contracting; the need to strengthen inspection; and violations of the right to collective bargaining and the right to strike.”

Global humanitarian group Human Rights Watch has also formally raised an issue that is among Colombia’s greatest shames — the malnutrition crisis among the indigenous Wayuu community on the Caribbean coast that has killed hundreds of children — as a factor the OECD should consider while assessing the country’s qualifications for membership.

“By securing a commitment by the Colombian government to take serious and concrete measures, the OECD could play an important role in helping address this critical crisis,” wrote José Miguel Vivanco, director of Human Rights Watch’s Americas division, in a letter to the OECD late last year.

Colombia Climbs the Ladder

Despite these concerns, the various committees of the OECD have now all approved Colombia to join the high-status economic club that dates back more than a half-century.

Angel Gurría, secretary general of the OECD, praised President Santos for working with the organization to help ensure Colombia could join before he left office in August.

“The accession of Colombia will contribute to our efforts to transform the OECD into a more diverse and inclusive institution.” – Angel Gurría, secretary general of the OECD

“Accession to our organization was set as a priority by President Santos when he assumed office, and we are glad that the process could be completed during his mandate,” said Gurria.

The OECD was founded in 1961 by Western elite nations, including only the United States, Canada, and 18 European nations (including Turkey). This soon expanded to bring in Japan, with Australia and New Zealand joining in the 1970s.

Mexico was admitted as the first Latin American nation in 1994 and Chile joined in 2010. Costa Rica, though a small economy, began negotiations to join in 2013. Others in the region, including Argentina, Brazil, and Peru, also have been pushing their credentials for membership in recent years.

Gurria also noted that welcoming Colombia to the group is beneficial as the OECD attempts to bring in more members of the global south to move beyond its legacy of being primarily a club for North American and European nations.

“The accession of Colombia will contribute to our efforts to transform the OECD into a more diverse and inclusive institution, which will ensure our relevance in the years and decades ahead,” said Gurria. “The global challenges we are facing today can only be addressed if we have emerging, developing and advanced economies working together.”

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About the Author

Jared Wade is editor in chief of Finance Colombia. He is a Bogotá-based journalist with 15 years of experience covering topics including business, financial services, Latin America, and sports. Email him at jared.wade(at) financecolombia.com or follow him on Twitter at @Jared_Wade.